Labor 'greed' on tunnel fiasco - sounds familiar

Feb 21, 2006

Imre Salusinszky, NSW political reporter..The Australian
February 21, 2006
THE NSW Government put greed before the public interest in its dealings over Sydney's Cross City Tunnel, a confidential report by a bipartisan parliamentary inquiry has found.

"According to the 137-page report, insufficient public consultation "has resulted in a project with little community ownership, which is likely to be one of the reasons for the current low levels of patronage".

The report recommends a raft of changes in the Government's use of public-private partnerships to deliver major infrastructure projects and that the policy of accepting upfront payments from private consortiums should be "expressly discontinued".
The draft report of the select committee, marked "confidential" but obtained by The Australian, also accuses the Government of a lack of transparency and a reluctance to take responsibility for the tunnel's problems.
The committee says it is "extremely disappointed by the responses received from the Premier (Morris Iemma) and ministers".
Their refusal to appear before the inquiry "has significantly impeded the committee's ability to properly address its terms of reference and is an example of a breakdown in accountability mechanisms of ministers".

Labor members of the committee will attempt to water down its recommendations before the final report is tabled next Tuesday, with the outcome depending on the casting vote of committee chairman Fred Nile.
For the right to operate the tunnel for 30 years, the CrossCity Motorway consortium paid the Government an up-front fee of nearly $97 million.
In return the Government effected widespread road closures around the tunnel and allowed the operators to levy a $3.56 toll -- two factors widely seen as contributing to motorists' anger and reluctance to use the tunnel since it opened last August.
Significantly, while accepting that PPPs transfer risk from the public to the private sector, in the light of poor patronage the committee says it wishes to "raise a cautionary note to equity investors in large infrastructure projects, particularly as such equity investors increasingly include superannuation funds".
A little-known fact about the tunnel is that commonwealth and state public service superannuation funds hold a combined 20 per cent of the equity in the project.
The committee says "there was not a sufficiently thorough evaluation of the public interest before the decision was taken to open the project to the private sector". It says the Government's "overriding concern" that new roads should be built at no cost to itself "has directly resulted in tolls higher than originally anticipated" and "certainly resulted in significant cost to the community".

The draft report also recommends:
- That the Government continue to push the owners to drop the toll to $2.90;
- That future tolls be calculated to give the motorist value for money;
- That community consultation processes be reviewed, with more information made public;
- And that all road closures around the tunnel should be reviewed after a year of operation, with a view to "potential reversals of road changes".

In the event that such changes reduce tunnel revenue, the project deed signed in December 2002 appears to allow the operators to claim compensation based on the original projection of 90,000 motorists using the tunnel each day, as against the 30,000 who are using it now.

This article is from the Australian - and is an example of how quality reporting is a benefit to the public.